Wednesday, April 23, 2014

IBJ Reports Removing False Homestead Exemptions to Yield Bonanza

From the Indianapolis Business Journal:

When this spring's tax bills are collected, Marion County stands to receive tens of millions of dollars from property owners who’ve been claiming false homestead deductions.

The property-tax billing cycle that ends May 12 is the first to reflect the enforcement effort that kicked off with a 2009 state law requiring property owners to verify their eligibility for the deduction, which applies only to primary residences.

In Marion County, Auditor Billie Breaux removed the deduction from about 34,000 parcels for the 2014 tax bills, homestead verification specialist Stephanie Miller said.

Many of those deductions were removed because the property owner failed to complete and send back a pink-colored verification form, Miller said. The auditor’s office has been flooded with calls, and Marion County might end up correcting as many as 3,600 tax bills, she said.

After sending out multiple notices over four years, Miller believes most of those who lost their deductions are homestead scofflaws.

“I would imagine, the overwhelming majority of these, they don’t qualify,” she said.

Tax bills could double or triple, depending on the actual use of the property. The maximum tax rate on primary residences is 1 percent of assessed value, but it’s 2 percent on rentals and 3 percent on commercial property.

Under the law, those former homesteads also can be subject to three years of back taxes. The Marion County auditor’s office already has billed back taxes on about 1,000 parcels and collected about $3.1 million, Miller said.

The average three-year bill has been about $3,200, Miller said. If the same average applies to the final batch of ineligible homesteads, the county could collect $97 million.

The rate of property owners misusing the homestead deduction has been especially high in Marion and Allen counties, said Dawn Coverdale,  the president of the Indiana County Auditors’ Association.